Inflation rises 3.8% in year to June
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The news: Inflation increased 1% over the June quarter and 3.8% over the year, in line with economists’ expectations but marking the first annual increase since December 2022, according to figures from the Australian Bureau of Statistics (ABS).
The numbers: The newly released monthly indicator increased 3.8% in the 12 months to June, down from 4% in the 12 months to May.
Economists were expecting 3.8% for the year to the June quarter, aligning with the Reserve Bank's forecasts. They expected the trimmed mean, which is the central bank’s preferred measure, to be closer to 4% (compared to the RBA’s 3.8% expectation for this data point too).
The trimmed mean annual inflation fell to 3.9% in the June quarter, down from 4% in the March quarter. The ABS notes this is the sixth quarter in a row to show an easing in this critical measure.
The biggest contributor to the headlining figure over the quarter was housing, up 1.1%. This was driven largely by a 2% rise in rent costs and a 1.1% rise in new dwelling costs. High labour and materials costs are both contributing to the expense of new homes. Electricity prices were up 6% over the year and automotive fuel was up 7.7%.
Food and non-alcoholic beverages also increased significantly in the three months to June, up 1.2%. Fruit and vegetables were up 6.3% with unfavourable growing conditions cited as the main reason, driving the highest price rise since 2016 for this category.
The context: The June quarter inflation figures have been highly anticipated as they are significant for next week’s August interest rate decision. Economists were broadly suggesting that anything well into the 4% mark would signal a higher risk of a rate rise.
This figure is unlikely to change many of the current rates forecasts, with most expecting the RBA to remain on hold next week.
What they said: “Prices rose for goods such as tobacco, new dwellings, automotive fuel and fruit. Annual services inflation continued to be impacted by higher prices for rents and insurance,” said ABS head of prices statistics Michelle Marquardt.
The source: Australian Bureau of Statistics
